Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

China Showing Surprising Interest in the U.S. Stock Market Food Sector

Stock-Markets / Sector Analysis Jun 03, 2013 - 06:23 PM GMT

By: InvestmentContrarian

Stock-Markets

George Leong writes: Over the past few years, we have seen an increase in takeover activity in North America’s stock markets by China-based companies. The takeover targets have largely been in the energy and resources areas, where China is in search of alternative sources of raw materials.


In 2009 and 2010, Chinese energy firms made about $48.0 billion in stock market acquisitions in North America, according to the International Energy Agency (IEA). China has major investments in the oil-rich Canadian tar sands in Alberta, and I expect to see more Chinese capital flowing into the North American stock market.

The biggest takeover in the stock market from a Chinese company to date was the $15.1-billion takeover of Canada-based Nexen Inc. (TSX/NXY) by CNOOC Limited (NYSE/CEO) in February 2013.

I was aware that the Chinese strategy to accumulate raw materials globally via the stock market would continue, but I was quite surprised to hear about the proposed takeover of the world’s largest pork producer, U.S.-based Smithfield Foods, Inc. (NYSE/SFD) by China’s largest pork producer, Shuanghui International Holdings Limited in a $7.1-billion deal. At issue is not the takeover price, since it was 31% above the closing price of the prior day, but it was more due to the surprise that China is interested in America’s food sector.

While it was obvious that the Chinese want oil and minerals investments in the stock market, the fact that China is moving into this country’s food sector might become an issue.

The Smithfield deal could represent the largest takeover of an American company in the stock market by a Chinese company and the second-largest after the Nexen deal in Canada. However, the deal must first be cleared by The Committee on Foreign Investment in the United States, which, in 2005, ruled against the Chinese takeover of U.S.-based oil company Unocal. But this Smithfield deal is different, since pork is not considered a security safeguard like oil or technology.

On the surface it may seem like the Chinese want access to the much higher quality U.S. pork, which is likely the major reason for the proposed deal, given the recent stories we have heard about the inconsistent quality of pork in China. For this reason, the Smithfield deal makes sense for Shuanghui.

Of course, the fear is that the deal would open the way for pork to flow into the United States from China despite the fact that Shuanghui is telling us that would not happen. If this is true, then it could be a good deal for Smithfield and its workers, who would have access to the American company’s pork products and could ship them to the massive Chinese market, where pork is the top meat consumed.

“The acquisition provides Smithfield the opportunity to expand its offering of products to China through Shuanghui’s distribution network,” said Shuanghui Chairman Wan Long. (Source: “Shuanghui International and Smithfield Foods Agree to Strategic Combination, Creating a Leading Global Pork Enterprise,” Smithfield Foods web site, May 29, 2013.)

It will be interesting to see if the takeover is approved, because it could set in play more takeovers in the stock market from Chinese companies down the road in areas such as food and agriculture—areas where demand is surging in China and where there is no national security risk to America.

Yet I couldn’t imagine a Chinese company buying Hormel Foods Corporation (NYSE/HRL) in the stock market, unless, of course, the Chinese love eating “SPAM.”

Source:http://www.investmentcontrarians.com/stock-marke...

George Leong, B.Comm.

http://www.profitconfidential.com

We publish Profit Confidential daily for our Lombardi Financial customers because we believe many of those reporting today’s financial news simply don’t know what they are telling you! Reporters are trained to tell you the news—not what it can mean for you! What you read in the popular news services, be it the daily newspapers, on the internet or TV, is the news from a “reporter’s opinion.” And there’s the big difference.

With Profit Confidential you are receiving the news with the opinions, commentaries and interpretations of seasoned financial analysts and economists. We analyze the actions of the stock market, precious metals, interest rates, real estate and other investments so we can tell you what we believe today’s financial news will mean for you tomorrow!

© 2013 Copyright Profit Confidential - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in